Amazon: Are You a Wealthy Bull or Stubborn Bear?

Aside from a trade here or there, a short play on AMZN has hardly paid off. Don't expect it to anytime soon.

NEW YORK ( TheStreet) -- Amazon.com ( AMZN) reports earnings on Thursday. The stock ended Friday's session up nearly 1% at $228.29, outperforming Apple ( AAPL) as well as the PowerShares QQQ Nasdaq 100 ETF ( QQQ). In fact, last week -- the week before both companies report -- Amazon got the better of Apple and the NASDAQ 100.

For months, Robert and I have engaged in a private difference of opinion over AMZN. In the last several weeks, we've taken it public via TheStreet.

The debate gets at core investing issues. On the surface, it asks, Does valuation matter? However, you cannot leave the conversation there. It requires context. Fleshing it out, in Amazon's case, it's quite clear -- and not as crazy a thought as bears make it out to be -- valuation absolutely does not matter.

Save a perfectly normal pullback here or there, Amazon stock continues to perform incredibly well. It was one of only a quarter of Nasdaq stocks to buck the downward trend on Friday. Objectively speaking, to this point, valuation has not mattered. Clearly, as it pertains to AMZN, investors use the P/E ratio as less of a valuation metric and more as a way to measure confidence in the company's ability to grow the top and bottom lines going forward.

The bulls get this because they understand Amazon's culture and the way CEO Jeff Bezos has run the business for the last 13 or so years. Bears such as Weinstein do not. Consider the assessment he made of Amazon's margins in the first of the two above-cited articles:

The most probable outcome when Amazon attempts to raise prices in order to increase margins is a loss in growth. In order to bring its P/E multiple to a "reasonable" retailing level of 35, Amazon needs to triple its net margin. Pendola suggests locking customers into the Amazon ecosystem is a valid substitute for profits.

That's not quite what I suggest. In any event, let's address Weinstein's discussion of Amazon's margins.

First, have a look at the last two years' worth of capital expenditures at Amazon versus the company's profit margin.

If we are to believe Amazon's capital expense guidance for the second quarter, expect them to report that it came in somewhere between $800 million and $900 million when the company releases second-quarter results on Thursday. That's more than double the first quarter number of $386 million.